How do you know when you need a financial planner, a money manager or either one? If you are considering hiring a financial advisor or money manager, it’s important to know the what the duties are of each.
Financial advisors often wear many hats while money managers usually wear only one.
Financial advisors, at their best, provide objective advise on retirement planning, college funding, getting out of debt, estate planning, insurance needs, tax planning and money management. Just about the only area that advisors have little knowledge of is personal debt collection. Other than that, a good financial planner should be able to steer you in the right direction on all matters financial.
I say,”at their best” because anyone can call themselves a financial advisor. As a result, some hold themselves out to clients as “objective advisors” but are anything but. Often, they are nothing more than sharpies selling life insurance or loaded mutual funds. Ewwwwww!
But provided you speak to a truly independent and qualified advisor, he or she can provide invaluable direction on the issues I mentioned above; estate planning, getting out of debt, college funding, tax planning, ideas about your living family trust and money management to name a few.
Sometimes, your financial advisor is also a money manager. If your financial advisor is also your money manager, hopefully, he or she will be only one of many choices you’ll be provided with. In other words, a good financial advisor who is also a money manager will provide you with options to money management and not force you to use only his or her money management services.
Why would a financial advisor offer money management options? Because he or she is centered on you rather than himself. In other words, good money managers are good (if they are lucky) at doing one thing. They are rarely great at more than one strategy. So if you are an aggressive investor you might not want your financial advisor to manage your money if she is more conservative. That being the case, your financial advisor should be able to provide you with a money manager suitable for your individual needs and objectives.
So if you are considering hiring a financial advisor, make sure you are clear on what services you are looking for and hire the right advisor who is best suited to provide those services. If you are interested in money management services, make sure you hire the money manager that best fits your appetite for risk.
How did you decide how to hire your financial advisor? What has been your experience?
J @ Your Own Retirement says
I think it depends on what your financial goals are as a person.